• Draghi’s comments prompt some fresh selling.
• EUR further weighed down by softer EZ data.
The EUR/GBP cross came under some renewed selling pressure on Wednesday and has now dropped back closer to 2-week lows, around mid-0.8800s.
After yesterday's modest rebound, the cross resumed with its prior depreciating slide and so far, traded with a negative bias for the fifth session in the previous six.
The shared currency's relative underperformance against the British Pound could be attributed to the ECB President Mario Draghi's comments on Wednesday, saying that a stronger Euro could weigh on inflation down the line.
This coupled with a disappointing EZ industrial production data, showing a larger than expected contraction of 1.0% in January, further dented sentiment surrounding the common currency and collaborated to the pair's fall to 100-day SMA support.
Meanwhile, the cross has been finding some buying interest near the 100-day SMA but every attempted recovery moves are now being sold into ahead of the 0.8900 handle, clearly suggesting that the near-term bearish trajectory might still be far from over.
However, it would be prudent to wait for a decisive break below the mentioned support before positioning for any further near-term depreciating move.
• EUR/GBP could test 0.9034 in the longer term – Commerzbank
Technical levels to watch
A convincing break below mid-0.8800s is likely to accelerate the fall towards 0.8820-15 intermediate support en-route the 0.8800 handle. On the upside, any meaningful up-move beyond 0.8875 level might continue to confront resistance near the 0.8900 handle, which if cleared might prompt some short-covering move and lift the cross back towards 0.8935-40 supply zone.
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